West End's property recovery in the spotlight

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The Independent Online

Trends in the West End of London will be in focus when the property group Shaftesbury issues half-yearly results on Wednesday.

Last week saw a string of upbeat updates from peers such as British Land, Land Securities and Great Portland Estates, with investors cheering improvements in net asset values and signs of recovery. But unlike those three, Shaftesbury doesn't deal in City offices or giant malls. The FTSE 250-listed group's stock-in-trade is shops, restaurants, cafés and the like, peppered around prime West End locations such as Carnaby Street, Chinatown and Covent Garden.

Given this mix, the market is likely to be curious about the level of tourist demand in the area, and its impact on Shaftesbury's tenants. Potential talking points include the impact of the recent volcanic ash cloud, which led to a closure of airports across the country, and the impact of movements in the foreign exchange markets.

Back in February, Shaftesbury said the West End had seen excellent trading over the Christmas and new year period, something which had fed through to tenant demand. Investors will no doubt be curious to learn how the trends have held up in subsequent months.

In terms of key metrics, analysts at Execution Noble said that when it comes to net asset values, or NAV, Shaftesbury may well end up delivering a positive surprise for investors. "Having beaten our September 2009 NAV estimate by 13 per cent ... we are braced for another positive surprise on NAV growth," the broker said, adding: "The company's unique portfolio has seen rents hold stable through the down cycle and future rental growth prospects reflect the structural imbalance of supply and demand for West End retail, restaurant and leisure space rather than relying on cyclical demand as in the office sector."

Today: Investors are unlikely to witness any surprises when the power protection firm Chloride issues full-year figures this morning. The company issued a trading update in April, and as Numis points out, the order trends highlighted through Chloride's third quarter have persisted through to the year end, with reported sales estimated to be around 3 per cent up on the year. "We expect further growth in the order book, which provides nearly six months visibility," the broker said, forecasting £40m in full-year pre-tax profits with 10.5p in earnings per share.

Results/updates: Cranswick, Treatt, Invensys and Chloride.

Tomorrow: Results/updates: BSS, Homeserve, De La Rue, KCOM, Pennon, Telecom Plus, Victrex and Marks & Spencer.

Wednesday: The luxury goods group Burberry is due to issue full-year figures mid-week, and the City is looking for £205m in adjusted pre-tax profits, compared to £174.6m last year. The planned restructuring in Spain is likely to be among the key talking points, according to Citigroup, whose analysts also recommend that investors watch out for management's guidance for the year ahead, along with details on cash generation in the second half of 2010 and any news on a possible share buyback exercise. Results/updates: Aveva, Hogg Robinson, Brewin Dolphin, Chrysalis, Innovation, Sportingbet, Burberry and Shaftesbury.

Thursday: The defence group Qinetiq will post its full-year results, and the occasion will mark chief executive Leo Quinn's first outing in front of the market. Numis expects investors to focus on his presentation, though it warns that detailed restructuring or margin targets are unlikely to be forthcoming this week. Elsewhere, the broker expects the company to outline its guidance for the year ahead. There is also the question of a potential rights issue, which may be among the areas that the market focuses on this week. "We are forecasting [a ratio of net debt to earnings before interest, tax, depreciation and amortisation] of 2.9 times at [the March 2010 year end] versus covenants of 3.5 times. This has raised market concerns over a potential rights issue," Numis said, noting that while the possibility of a cash call was a concern, it didn't consider it a likely outcome.

Results/updates: JJB Sports, Paypoint, Tate & Lyle, Antofagasta, Daily Mail & General Trust and Man Group.

Friday: Analysts expect further evidence of a recovery when the electronic parts supplier Electrocomponents issues its full-year figures at the end of this week. "Growth rates at Electrocomponents have continued to rebound significantly, with January sales growth of 10 per cent, accelerating to 15 for the fourth quarter [which ended in March]," Deutsche Bank said in a preview published last week, noting that the company has also indicated that its customers are "increasingly more confident".

Results/updates: Electrocomponents and Severn Trent.